Executive Interviews

Asian Metal: Mr. Wang, thank you for accepting the invitation of Asian Metal Interview Column. Please briefly introduce the overview of Jinzhou Hongding Metal Material Co.

Mr. Wang: Jinzhou Hongding Metal Material Co. is located in Jiudaoling Industrial Park, Santaizi Village, Toutai Township, Yi County, Jinzhou City, Liaoning Province, covering an area of more than 20,000 square meters. The company mainly produces ferrovanadium 50%min and ferrovanadium 80%min by outside furnace process, and processes all kinds of metal powder. With an annual production capacity of 1,500t, we have established long-term and stable sales channels both home and abroad. At present, we established cooperation relationship with Shandong Iron and Steel, Nanjing Iron and Steel, Rizhao Iron and Steel, and other large steel enterprises. Our products are exported to Holland, Brazil, Japan, South Korea, Belgium and other countries and regions.

Asian Metal: Since March this year, Chinese exported ferrovanadium increased significantly and started to go in the outbreak period. What’s the main reason do you believe?

Mr. Wang: Western advanced countries imposed tough economic sanctions against Russia because of the conflict between Russia and Ukraine. As a traditional big vanadium producing country, Russia's vanadium export resistance to Europe increased significantly, resulting in a shortage of ferrovanadium supply in European market, so Asian market witnessed growing ferrovanadium inquiries in March. And China, as a country with the most potential for ferrovanadium output increment, its ferrovanadium 80%min export market embraced a significant increase.

Asian Metal: How do you see the sustainability of Chinese ferrovanadium export by bulk volume in the context of Russia-Ukraine conflict? Whether Chinese ferrovanadium would become the main forces to fill the gap?

Mr. Wang: Russian customs data shows that in 2020-2021, Russia directly exported 21,617t of vanadium pentoxide in total and about 80% flowed to Europe, which was further released to the global market after changing into ferrovanadium in local market. During this period, Russia exported a total of 2,237t of ferrovanadium directly, and about 55% was exported to European market directly. According to the data, we can intuitively see Russia's pivotal position in global vanadium industry. Under the background of Russia-Ukraine conflict, western advanced countries imposed sanctions on Russia, which would surely cause a shortage of vanadium supply to European and American steel industry. According to customs data, we estimate that the ferrovanadium 80%min average monthly shortfall in the European and American market would be 516t without Russia’s supply. We make a horizontal evaluation of the production status of global ferrovanadium producer countries, and believe that most of the shortfall would be made up by Chinese ferrovanadium producers. China would be surely the main forces to fill the gap. According to the current price trend, Chinese ferrovanadium export market would be optimistic at least in the coming two months. We need to assess the sanction situation and price gap between China and international market for the market two months later.

Asian Metal: Does China's ferrovanadium export market has a competitive advantage over other producing countries in terms of taxation and pricing mechanism?

Mr. Wang: China has no tariff in ferrovanadium 80%min export, but the European Union would charge a tariff of about 2.7% when we export goods to the European market. With long history of precipitation development of ferrovanadium industry in China, China got both the industrial scale and technological advantages. In addition, China is also a big steel producer, and our domestic ferrovanadium industry has fully formed an independent market pricing mechanism. We import cheaper resources when domestic prices stay at higher level and export on the contrary, we export. Due to China's strong vanadium resource flexibility, the export prices of ferrovanadium may be more advantageous than those of other countries for the moment. However, in terms of taxation, China couldn’t be directly compared with other countries because some countries would have free trade agreements with each other.

Asian Metal: How is the reputation of Chinese ferrovanadium in international market? Can its production capacity and technical standards meet the demand of international market?

Mr. Wang: Most of China's ferrovanadium raw material comes from primary ore, and both the production capacity and quality control could be recognized by international market. International customers mainly need ferrovanadium 80%min. In terms of vanadium content, all Chinese ferrovanadium producers could meet their demand. The main difference lies in the impurity control. If China could steadily and consistently export ferrovanadium by bulk volume from now on, the excess production capacity pressure in domestic market would be greatly alleviated, and Chinese ferrovanadium industry would regain vitality. With the customer concept of honesty, excellence in quality control management, mature technology, Hongding company could effectively meet the high standard demand of international customers.

Asian Metal: The current international vanadium price has risen to the highest level since 2018, so is it possible for the international vanadium price to fall significantly?

Mr. Wang: By the end of March, the European ferrovanadium 80%min market prices stood at around USD60/kg V in warehouse Rotterdam, which hit a new peak since 2018. Meanwhile, Chinese ferrovanadium 80%min export prices stayed at around USD50/kg V FOB China. As buyers need to wait at least 35 days to deliver the goods from China port to Rotterdam warehouse, Chinese FOB prices stood at a nearly 20% lower than European spot market prices. According to the current signed export orders in China, we could predict that international market prices wouldn’t drop significantly for a period of time. The long-term price expectation needs to be judged again according to the sanctions against Russia. If Russian vanadium resources keep being suppressed, then international vanadium price may continue to touch a new peak. If the situation changed, and Russia could export vanadium products through re-export or market replacement in China or India, then international vanadium prices may fall back to its original position before the conflict.

Asian Metal: How do you evaluate the correlation between international vanadium prices and Chinese domestic vanadium prices?

Mr. Wang: The higher international vanadium prices would directly drive up Chinese export prices of vanadium pentoxide flake 98%min and ferrovanadium 80%min, and then extend to the whole vanadium products prices in China. As China's vanadium demand mainly rely on local steel industry, the general vanadium price tendency in China would still be mainly linked to Chinese rebar price.

Asian Metal: What’s your expectation for Chinese ferrovanadium export price trend in the coming two months?

Mr. Wang: According to Chinese export orders signed in March, the European market price should stay at above USD55/kg V in warehouse Rotterdam. As COVID-19 continues spreading, the terminal demand in the European market keeps soft. Since there is a supply gap, the local price level would show a correction when China's ferrovanadium arrived there and fill the gap. We expect that European ferrovanadium 80%min prices would stay at USD55-60/kg V in warehouse Rotterdam in the coming two months, that’s the reasonable price range.

Asian Metal: Thank you for your wonderful sharing!

Mr. Wang: Thank you too for the professional information platform.